EXIDE BANKRUPTCY BREAKING NEWS: Shareholders of bankrupt Exide ask judge to certify $2.7 million investor class action because Exide and a group of 10 Exide executives and board members knew that Vernon lead smelter was violating environmental regulations because it was leaking toxins and they concealed that in public statements and financial filings

The plaintiffs, which includes both shareholders and senior note holders, allege that Exide and a group of 10 Exide executives and board members knew that the company’s Vernon, California, facility was leaking toxins and concealed this fact in public statements and financial filings, leading investors to buy shares at inflated prices.

The plaintiffs, which includes both shareholders and senior note holders, allege that Exide and a group of 10 Exide executives and board members knew that the company’s Vernon, California, facility was leaking toxins and concealed this fact in public statements and financial filings, leading investors to buy shares at inflated prices.

In a memorandum in support of their motion for class certification, the plaintiffs argued that the question of whether the defendants made material misrepresentations and omissions to the public is common to the entire putative class, and asked U.S. District Judge Stephen Wilson to certify two classes — one of purchasers of Exide common stock from June 1, 2011, to May 24, 2013, and one of purchasers of Exide senior notes due 2018 from Aug. 8, 2011, to May 24, 2013.

“This case is ideally suited for adjudication on a class basis,” the memorandum states. “Plaintiffs allege that they, like other class embers, were injured by a common course of conduct: material misrepresentations and omissions by defendants concerning Exide’s environmental compliance and financial condition.”

The case was filed in April 2013 against Exide, its top executives and members of its board, and the second amended complaint alleges that the company failed to disclose that its Vernon facility was releasing high levels of arsenic, lead and other hazardous materials, with state regulators — including one that eventually filed suit seeking $40 million in penalties against the company — eventually suspending operations at the plant and calling for environmental remediation.

Instead, the company misled investors by touting its compliance with environmental standards, including specifically stating that the Vernon plant met air quality standards, the plaintiffs argued.

In July 2013, the case was consolidated with two similar cases and Exide was voluntarily dropped as a defendant after entering Chapter 11 bankruptcy in the wake of the plant shutdown. The individual defendants subsequently won their motion to dismiss the suit in December, without prejudice, with the second amended complaint filed in January.

In August 2014, Judge Wilson denied the defendants’ motion to dismiss the second amended complaint, ruling that the plaintiffs had adequately alleged that the defendants had made materially false or misleading statements regarding the company’s environmental compliance.

In showing that the company had implied in financial statements that it had no outstanding environmental issues, when its Vernon battery recycling plant was actually under investigation by state regulators, as well as showing that former Exide CEO James R. Bolch had publicly claimed that the facility was within air quality standards, despite releasing highly elevated levels of arsenic, the shareholder plaintiffs had specifically alleged misleading statements by the defendants, according to the order.

On Monday, the plaintiffs urged Judge Wilson to grant them class certification, arguing in their brief that liability for the alleged misconduct should be decided on a class basis.

“These questions clearly predominate over individual questions because defendants’ alleged conduct affected all class members in the same manner and, through false statements, artificially inflated the price of Exide common stock and notes,” the memorandum states.

On Tuesday, Judge Wilson granted the defendants’ request for a time extension to file their opposition to the motion for class certification, ordering it be submitted by April 20.

Representatives for the parties did not immediately respond to requests for comment on Tuesday.

The plaintiffs are represented by Robert S. Green of Green & Noblin PC and William B. Federman and A. Brooke Murphy of Federman & Sherwood.

The defendants are represented by Edwin V. Woodsome Jr., David H. Kistenbroker and Carl E. Volz of Dechert LLP.

The case is David M. Loritz v. Exide Technologies et al., case number 2:13-cv-02607, in the U.S. District Court for the Central District of California.